House prices to fall by 4.5% this year

Houses falling

UK house prices will fall by 4.5% this year, according to a leading think tank.

The National Institute of Social and Economic Research says prices will then continue to fall by 1.5% per year until 2015. It claims prices rose during the 2000s because first-time buyers were able to get onto the property market. Mortgages were easier to come by as the deposits required were lower.

The research is backed up by the latest figures from the Land Registry which reveal house prices in England and Wales are on the decline again.

The average property price fell by 1.1% in March to £160,996. This means prices were 2.3% lower than at the same time last year.

Meanwhile figures from the Council of Mortgage Lenders suggest the mortgage market is recovering with the amount lent in March up 21% on February.

Chief economist Bob Pannell says: “The housing market has emerged hesitantly from hibernation. Household finances are under a lot of pressure, and as a result demand for house purchase loans fell in the first three months of 2011. Lenders expect mortgage credit availability to improve this quarter, and this should help to underpin house purchase activity albeit at pretty low levels.”

Five things that can add value to your home

While latest research might show house prices are falling there are some things that can boost the value of your property.

1. Better transport links
A new Tube or train station, which provides easier access to a city centre, could add thousands to the value of your home.

2. Perfect neighbours
Vigilant neighbours not only make for a well-kept street but provide extra security for your home - all factors which add value to your own home when coming to sell.

3. Good results at the local school
According to the Royal Institution of Chartered Surveyors, a school with a good Ofsted report will add 8% to the value of homes that fall within the catchment area.

4. An official accolade
When a city has been given recognition, such as Liverpool's Capital of Culture in 2008, it sees a boost in investment which often translates into inflated house prices.

5. A major sporting event
With East London hosting the Olympics in 2012, surrounding properties witnessed a 15% rise in value before the property crash, according to Halifax.



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While house prices have fallen, there are a lot of things you can do to increase home value. However, nr 5 is not in your own control. You'll either be luckily and have a major sporting event near or you don't have

Yet vendors/estate agents are still trying to market properties at 2007 prices - and expect to get asking price whatever the condition of property. Not surpising no one wants to buy at inflated prices.

This talking down the market will make things slower still for house purchases ~ increasing demand for rental property and consequently rents will continue to rise by "supply and demand"

Despite a dire economic climate, rise in unemployment and a global recession, the UK housing market seems to be in denial. No sane person, unless terribly naive and/or unrealistically optimistic, would think it a good time to buy than to rent.
The average house prices today are 2.6 times what they were in 1993, yet the average salary (bar London) remains more or less what it was back in 1993. The property boom during the late 90's onwards, it would seem, was largely due to relaxed lending terms. And so it isn't a surprise that the bubble had to burst; just as it isn't a surprise that with strict lending terms, a virtually unchanged average salary and stupidly high house prices, people are not buying. The question is: when will the people setting the house prices wake up and smell the coffee? As soon as they do, and prices are set more reasonably in relation to salaries, the quicker the market we pick up. Until then, they can keep on dreaming of pastures green.